City Reaches New Heights
There was some big news in the world of offices this week - developer Stanhope submitted planning for what will be the City’s tallest building at 309.6 metres,
1 Undershaft. Giant futuristic balcony aside, there are exhibition displays, dedicated education zones, restaurants, and, of course, multiple floors of office space.
According to the application documents, these revised plans are a “re-evaluation and response to post-pandemic needs, revised market demands, and the changing context and aspirations of the City of London.”
Indicative of a wider trend, the changes shouldn’t be a huge shock. It’s no secret landlords have had to adapt to shifting occupier preferences, taking into account a growing desire for flexible workspaces and shorter leases. Despite this, demand for Cat A offices in prime locations remains strong. This optimism is also being mirrored across our client portfolio, with Mitsubishi Estate’s successful leasing of
8 Bishopsgate.
Across the market more widely, we’re witnessing a classic ‘best vs the rest’ scenario. On the other end of the spectrum, there's the looming challenge of stranded assets and properties failing to meet EPC targets. None of these issues apply here, but demand for offices isn’t what it was. With more than 10 projects in the pipeline for the Eastern Cluster alone, how certain are landlords that they can fill their space? And what (if anything) will persuade business leaders to continue to take leases in upcoming assets?
Good press will certainly help. As reported in the Evening Standard last week, research by *checks notes* the City of London Corporation puts London on top in the rankings of global financial centres, after coming joint first with New York last year. Even considering the woes of the US office market, the contrast remains striking. London's office vacancy rate dropped to 7.3%, whereas New York's spiked to just over a fifth.
Political engagement at a national level will also be vital. Speaking to C-suite executives on Thursday, Kier Starmer and Rachel Reeves put their best business feet forward. With a renewed commitment to delivering growth, Starmer’s government in waiting clearly has the City at the front of its mind. Chris Hope and Robert Peston also looked cheery in alarmingly similar selfies, and reports from hacks seem largely optimistic.
The plans for 1 Undershaft mark a significant milestone for the City's skyline, and, despite various challenges, the demand for prime office space prevails. With promising signs from Starmer and success stories like the leasing of 8 Bishopsgate, the industry should have confidence in the City and its office market.